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CARES Act Passes Senate—Current Version Contains Major Implications for Employers (US)

In a late night vote on March 25, 2020, the Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (‘‘CARES Act’’).  The CARES Act will, among other things, inject $2 trillion into the US economy if passed by the House of Representatives and signed by President Trump.  This is widely anticipated to occur by week’s end.  For employers, passage of the Act builds on the Families First Coronavirus Response Act passed earlier in the month and has significant employment law implications, including provisions expanding unemployment insurance benefits and providing direct economic support to business through government loans.

Regarding unemployment insurance, the CARES Act establishes a temporary Pandemic Unemployment Assistance program through December 31, 2020, which expands typical state unemployment insurance coverage to include self-employed individuals, independent contractors, part-time workers (who are not covered by all states in normal circumstances) and others who are unable to work for reasons related to COVID-19.  Such reasons include the following:

  • being diagnosed with COVID-19;

  • experiencing symptoms of COVID-19 and seeking a COVID-19 diagnosis or testing;

  • a member of the individual’s household has been diagnosed with COVID–19;

  • caring for a family member or household member who has been diagnosed with COVID-19;

  • caring for a child or other household member whose facility has been shut down due to the coronavirus pandemic;

  • being unable to reach the place of work due to quarantine imposed as a direct result of the COVID-19 public health emergency;

  • being unable to reach the place of employment because a health care provider has advised self-quarantine due to concerns related to COVID–19;

  • being scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;

  • becoming the breadwinner or major support for a household because the head of the household died as a direct result of COVID-19;

  • quitting a job as a direct result of COVID-19; and

  • closure of place of business as a direct result of COVID-19.

In additional to the normal state unemployment benefits which vary from state by state, the CARES Act would provide an additional $600 per week benefit for up to four months, the intent of which is provide benefits that are closer to 100% of an individual’s normal income.  Additionally, the CARES Act would extend state unemployment insurance benefits by an additional 13 weeks for eligible individuals, not to exceed a total of 39 weeks.

For small businesses, the CARES Act incentivizes continued employment of and payment to workers by providing benefits through partially forgivable loans used to cover payroll and benefits expenses and overhead costs.   For full coverage of the CARES Act’s provisions that apply to small and mid-sized businesses, click here.

Federal loan assistance is also available to mid-sized businesses with between 500 and 10,000 employees, subject to a number of important conditions, including:

  • employers must retain at least 90% of their workforce at full pay with benefits until September 30, 2020 and/or intend to restore not less than 90% of the employer’s workforce that existed as of February 1, 2020 at full pay with benefits no later than four months after the termination of the COVID-19 public health emergency declaration;

  • employers with unionized workforces must not “abrogate” existing collective bargaining agreements for the term of the loan and two years after completing repayment of the loan; and

  • employers must remain neutral in response to any “union organizing effort” during the term of the loan.

Further information will be made available when the CARES Act becomes final.

© Copyright 2020 Squire Patton Boggs (US) LLP

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About this Author

Daniel B. Pasternak, Squire Patton Boggs, Phoenix, Labor Litigation Layer
Partner

Dan Pasternak focuses his practice on litigating labor and employment claims, representing management in traditional labor relations matters, and working with employers to develop and enforce business-sensible policies and practices to effectively manage their human resources.

Dan represents employers before federal and state courts and administrative agencies, and in arbitration and mediation proceedings, in employment matters arising under the array of federal and state employment laws, including discrimination, harassment, retaliation,...

602 528 4187
Anne Marie Schloemer, Employment Attorney, Squire Patton Boggs Law Firm
Associate

Anne Marie Schloemer (Prack) researches and analyzes legal sources for drafting memorandum, pleadings and position statements related to employment law. She also drafts discovery requests and responses, and prepares for depositions and litigation.

In addition, Anne Marie participates in all aspects of workers’ compensation administrative hearings including the preparation of client defenses to employees’ claims and medical histories and summaries.

614.365.2757